636 F.3d 1266
10th Cir.2011Background
- Pure Energy paid field employees on a day-rate plan, not tracking hours; employees routinely worked ~84 hours/week over seven days.
- The day-rate formula did not comply with 29 C.F.R. § 778.112, underpaying overtime owed for hours over 40 per week.
- In 2005 Pure Energy shifted U.S. payroll to domestic management; Cindy Rucker was hired to run payroll and sought attorney advice.
- Colorado attorney Hurcomb advised that day rate could be compliant if regular/overtime rates were itemized and shifts did not exceed 12 hours; he did not do legal research on day rates.
- Rucker communicated advice to management; the company did not implement measures to ensure hours over 40 or daily limits were properly compensated.
- A prior related case Condos v. Pure Energy Servs. (USA), Inc. resulted in a settlement admitting overtime owed; plaintiffs in this case are similarly situated.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FLSA violation is willful for 3-year limits | Pure Energy acted willfully by disregarding FLSA requirements. | Hurcomb’s advice created reasonable reliance. | Willfulness found; 3-year period applies. |
| Whether liquidated damages were appropriate | Liquidated damages should be awarded. | Good faith/reasonableness may limit damages. | Liquidated damages affirmed; court retains discretion to award. |
Key Cases Cited
- McLaughlin v. Richland Shoe Co., 486 U.S. 128 (1988) (willful standard for three-year limit; knowledge or reckless disregard)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (reckless disregard standard; risk of harm sufficient when obvious)
- Trans World Airlines, Inc. v. Thurston, 469 U.S. 111 (1985) (advice of counsel as one factor; overall conduct analyzed)
- United States v. Wenger, 427 F.3d 840 (10th Cir. 2005) (advice-of-counsel is one factor in willfulness analysis; not definitive)
- Takecare Corp. v. Takecare of Oklahoma, Inc., 889 F.2d 955 (10th Cir. 1989) (counsel’s advice alone not shield from consequences)
- City of Sapulpa v. Dept. of Labor, 30 F.3d 1285 (10th Cir. 1994) (liquidated damages discretion; good-faith/unreasonableness standard)
- Renfro v. City of Emporia, 948 F.2d 1529 (10th Cir. 1991) (purpose of liquidated damages in FLSA cases)